Startup cost
$10k–$30k
TRUiC Business Ideas
How to Start an Energy Drink Business
Decision Snapshot
Energy Drinks
Idea Score
58
Profit margin
8%
Break-even
4 mo–12 mo
Time to launch
12 wk–36 wk
Demand trend
Rising
5-yr failure rate
—
Capital intensity
Medium
Time commitment
Full time
Part 1 - How to start an Energy Drink business - Background
You may sell your energy drinks through vending machines, restaurants, grocery stores, and even bars. Branding it in such a way as to emphasize your home town or state can help foster community spirit (similar to how the name of Gatorade helps honor the University of Florida where it was developed), and your choice of ingredients may allow you to emphasize the healthy effects this drink has on its consumers.
Our guide is in 3 parts:
- Part 1 - How to start an Energy Drinks business - Background
- Part 2 - Our planner tool to see if this idea is the right fit for you
- Part 3 - Action plan to get started
What are the costs involved in opening an energy drink business?
The costs involved in opening an energy drink business can vary. A Bloomberg report from 2012 estimated that it may cost $100,000 or more to break into this business. A quarter of that money may go to a beverage development company in order to get your drink to a prototype stage. It may cost another $25,000 to get the raw ingredients and other materials necessary to begin production, including the labels and packaging. You must then pay for the labor, inventory, and distribution of your initial products: depending on how many units you are producing, this could cost up to $40,000. Finally, it is worth investing at least $10,000 or more into your initial advertising push: you are entering into a crowded market, and it’s important to let customers know how and why your product stands out.
What are the ongoing expenses for an energy drink business?
If you are working with a beverage distribution company, your ongoing expenses are something of a double-edged sword: you will not have to separately manage aspects such as production, storage, and shipping on your own, and you won’t have to personally pay for pricey business leases. However, all of these things factor into your production costs: if it costs $40,000 to produce, store, and ship a certain number of drinks in your first month, it will cost the same to ship that same amount next month. This cost will go up or down depending on the quantity of drinks produced.
Who is the target market?
The typical demographic for energy drinks is young men between the ages of 16 and 24. This is the legacy of the original marketing for companies such as Monster, although you can tweak your ingredients, branding, and marketing to target a less-served demographic and develop a better niche.
How does an energy drink business make money?
An energy drink company makes money through the distribution and sale of its own brand of energy drinks.
How much can you charge customers?
As a product, energy drinks have a wide range of price points. For a 16-ounce drink, prices typically range from $1.99 for something like Full Throttle to $4.00 for something like Red Bull. Your own price will likely fall in-between these, though you want to be competitive within your region.
How much profit can an energy drink business make?
The exact profit you can make is hard to determine, but things look pretty good: the energy drink industry has seen a five percent boost since 2013 and is overtaking soda as the drink of choice for many consumers. Sales of Red Bull amount to over $3.4 million each year and Monster Energy Drink sells over $3 million. While it will take your own drink longer to establish itself, there is great potential for profit.
How can you make your business more profitable?
Be sure to price your drinks competitively, but don’t be afraid to increases the price as need be: even a small bump can lead to a big shift in profits. Use your social media to advertise the other potential uses of your energy drink: a good model is Red Bull, who helped make Red Bull and vodka a preferred drink for many club goers. Finally, make sure your advertisements always highlight your community roots. This helps establish you within your region but also positively distinguishes you from bigger companies, making your drink look more artisinal and, therefore, more appealing.
Day-to-Day and Growth
What happens during a typical day at an energy drink business?
Your exact daily activities will vary depending on how you start your business. If you work with a beverage development company, you will spend much of your days raising funds and collaborating with various professionals on everything from the exact ingredients of your drink to its logo, brand name, and marketing. You will also help facilitate practical details such as the inventory and shipment of your products. If you want to maintain more direct control over your product, you may decide to work with a co-packer that emphasizes research and development rather than a larger consulting company.
What are some skills and experiences that will help you build a successful energy drink business?
A formal education in fields such as health or chemistry can aid you in creating the energy drink itself. Prior sales experience can help you set up the various distribution deals needed for your energy drink to thrive. While less likely, any direct experience you may have working with an energy drink manufacturer will be invaluable.
What is the growth potential for an energy drink business?
The growth potential for this business is modest. The Monster Energy Drink company recently experienced a lower sales bump than expected (8.9% rather than double digits) even after being bought out by marketing juggernaut Coca-Cola. However, it should be noted that the sales bump they received is still a good indicator of market health and, as mentioned earlier, the market certainly has room for more energy drinks catering to different demographics than Monster.
What are some insider tips for jump starting an energy drink business?
Stand out from the competition by developing a specific niche. For instance, marketing towards those thirty and up can instantly distinguish you from the Monster demographic. Some form of community branding and community-based advertising can also help your drink take root in a specific region, with positive word of mouth allowing you to later expand. Finally, be very selective about the development of a logo: this will be the first thing customers see when they view your drink in a vending machine, and it must be vivid and distinctive.
How and when to build a team
Unlike some jobs, this will require a team very early on. Whether you are working with a beverage consulting company or a co-packing company, it will take a large team to bring your energy drink from concept to market.
Part 2 - Is an Energy Drink business the right fit for you?
Business Evaluation & Strategy Tool
We'll walk you through the four pillars every business needs: Points of Leverage, Marketing Strategy, Financial Model, and Personal Compatibility. At the end you'll see a personalized report and your action plan below will be tailored to your answers.
Step 1 of 4 — Points of Leverage
Every viable business has natural advantages. Below are common leverage points across four categories. Pick the ones that apply to your Energy Drinks business. We've pre-suggested a few based on your idea — review and adjust.
Step 2 of 4 — Marketing Strategy
Without a way to connect with customers, even great businesses fail. Pick the channels you plan to use to reach your customers.
Step 3 of 4 — Financial Model
Enter your monthly baseline costs — the minimum overhead to keep the business running. Then we'll calculate how many sales per month you need to break even.
Step 4 of 4 — Personal Compatibility
A business that doesn't fit your life will fail no matter how good the numbers look. Tell us how this business fits you.
Your Energy Drinks Evaluation Report
Complete the four pillars and your personalized summary will appear here.
Points of Leverage
Marketing Strategy
Financial Model
Personal Compatibility
Part 3 - Action plan to launch your Energy Drink business in 90 days
Nine concrete steps to take you from idea to open business, grouped into 30-day phases. Complete the planner above and we'll highlight what's most important for your situation.
First 30 days — Foundation
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Form your legal entity
An LLC keeps your personal assets separate from business debts and lawsuits — the most common reason small business owners choose this structure. Sole proprietorships and partnerships do not provide this protection.
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Get an EIN and register for taxes
Apply for your free Employer Identification Number through the IRS, then register for any state or local taxes that apply to your business (sales tax, franchise tax).
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Open a business bank account and credit card
A dedicated business account is required to maintain personal asset protection. Mixing personal and business finances ('piercing the corporate veil') can void your LLC's liability shield.
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Set up business accounting
Recording expenses and income from day one makes tax filing easier and lets you see when the business is actually profitable. Use software (QuickBooks, Wave) or a part-time bookkeeper.
Days 30–60 — Compliance & Risk
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Get permits and licenses
State and local requirements vary widely. Brick-and-mortar businesses typically need a Certificate of Occupancy; service businesses may need specific professional licensing; food businesses need health permits.
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Get business insurance
General Liability Insurance is the most common starting point. If you'll have employees, most states require Workers' Compensation. Specific industries need additional coverage (product liability, professional liability, etc.).
Days 60–90 — Launch
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Define your brand
Your brand is how customers perceive and remember you. A clear name, logo, and visual identity make every later marketing decision easier and protect you legally as you grow.
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Create your business website
Every legitimate business needs a website. Social media pages are not a substitute — you don't own the platform. Modern website builders mean you can launch a clean site in a weekend without a developer.
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Set up your business phone system
A dedicated business number keeps your personal life private, makes the business look legitimate, and lets you route calls professionally. Cloud phone services start under $20/month.